Seniors Reject Retirement Trust Fund Borrowing As Disability Fix
By Mary Johnson, editor
According to the Congressional Budget Office, the Social Security Disability program will be fully insolvent by 2017, but so far Congress has given little public indication as to how it would fix the program. What Congress is most likely to consider is the same plan it used in the past – legislation that temporarily "transfers" or reallocates payroll taxes from the Social Security retirement trust fund to cover disability benefits instead.
According to the Congressional Research Service, such a transfer last took place 20 years ago – in 1994. The move didn't solve any underlying financing issues then, any more than it would now – but it did buy time for Congress to enact changes after months of fractious debate. But the finances of the Social Security Retirement Trust Fund have dramatically changed since 1994 when the retirement trust fund received a tax surplus. Today the retirement trust fund is also in deficit, paying out more in revenues than it receives taxes. Borrowing today would mean the federal government would have to borrow more from the public to cover retirement benefits.
Although the retirement trust fund still holds special non-marketable bonds (I.O.U.s) from previous federal government borrowing, the Congressional Budget Office estimates that transfers to the disability trust fund now would cause the retirement trust fund to become exhausted four years earlier than currently projected.
Members of Congress should be very wary of trust fund transfers or reallocation schemes this time around, however. According to a recent TSCL poll, this option has no support whatsoever with seniors. Less than 1% of those responding said they favored doing so.
In addition, seniors were almost evenly split between measures to improve the disability program's financing – by raising taxes or tightening the eligibility criteria and conducting more annual continuing eligibility reviews to reduce fraud. The majority – 54% – favor requiring high wage earners to pay Social Security taxes on all of their earnings. Forty-five percent favor tightening eligibility criteria, and conducting more annual eligibility reviews.
TSCL believes the legislative solution to the disability program's insolvency will need to be bipartisan, and would most likely need to include higher revenues, as well as tighter eligibility and more continuing eligibility reviews to resolve fiscal solvency problems.
